Non résident status

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An NRI since 1995 is planning to spend 180 days in India annually for three financial years to potentially shift NRE fixed deposit funds and reduce income tax. The individual questions if they will still be considered a non-resident for tax purposes. While they might be treated as a non-resident for the first two years, the third year (FY 2026-27) could see them classified as a Resident Not Ordinarily Resident (RNOR) depending on their total stay in India over the preceding four financial years, as per Section 6(1) of the Income Tax Act, 1961.

Anand Prakash Garg

Anand Prakash Garg (Querist)
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03 May 2024 I am an NRI since year 1995. Now I have plan to stay in india every year 180 days and balance days in oversees with my son for next three years (Financial year 2024-25 to 2026-27).
This will help me to divert my NRE fixed deposit money to other investment like shares, MF etc and save income tax in my hand.

Will I will be treated as NON RESIDENT ?
Is my under standing correct for tax planning.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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04 May 2024 You will be considered NRI only for two next year, and Resident (RNOR) in third year i.e. for FY 2026-27.

Anand Prakash Garg

Anand Prakash Garg (Querist)
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04 May 2024 Many thanks for reply.
Why will not be considered NRI in FY 2026-27 as I plan to away +182 days of oversees.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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04 May 2024 As per section 6(1) of Income Tax Act, 1961, Residential status is determined on the basis of number of days of stay in India. An individual is said to be resident in India in any previous year, if he satisfies any one of the following conditions:
i. He has been in India during the previous year for a total period of 182 days or more OR
ii. He has been in India during the 4 years immediately preceding the previous year for a total period of 365 days or more and has been in India for at least 60 days in the relevant previous year.
For the FY 2026-27, check second condition. If you have not exceeded 364 days in any preceding four years, you will be NRI; otherwise RNOR.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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07 September 2024 Good Luck.

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